Taxation (VAT / Sales Tax)

Xilancer can add VAT or sales tax to orders. This page explains, in plain language, how tax works for the employer (the client) and the freelancer, how to turn it on, and where the numbers appear afterwards.

Tax is a core feature of Xilancer, not a plugin. There are two separate mechanisms, and you can use either one or both:

1. Freelancer tax — each freelancer declares their own VAT or sales tax, and it is added on top of their service price. This is the main, ready-to-use system.
2. Buyer tax rules — the admin sets tax rates per country, and the client is charged based on where they are. This is optional and can be switched off.

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Who pays and who remits

This is the part people most often get wrong, so start here:

Xilancer does not withhold or remit tax on a freelancer's behalf. The freelancer is responsible for filing and paying the tax they collect. If you need tax withheld automatically from payouts, that has to be handled outside the platform.

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Turning tax on

Tax collection is off by default. To enable it:

1. Sign in to the admin panel.
2. Open Additional Settings, then Tax / VAT Settings.
3. Turn Tax Collection on.
4. Save.

While this is off, no tax is added to any order, even if freelancers have filled in their tax details. Turn it on only once you have decided how you want tax handled in your marketplace.

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Freelancer tax: how a freelancer sets it up

Once tax collection is enabled, freelancers see a tax section in their profile settings. They:

1. Choose the tax type
   • I do not charge tax — no tax is added to their orders.
   • VAT — value-added tax.
   • Sales Tax — sales tax.
2. Choose the scheme
   • EU VAT — for European Union VAT.
   • US Sales Tax — for United States sales tax.
   • Other — for any other tax system.
3. Enter the rate as a percentage, for example 20 for 20%.
4. Enter the tax country as a two-letter country code, for example DE or US.
5. Optionally add their VAT number, legal name, and tax address. These details are printed on invoices as the seller's identity, which makes the invoice usable for the freelancer's own tax filing.

A freelancer can change these settings at any time, but changes only affect new orders. Orders that have already been placed keep the tax amount that applied when they were placed.

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How the tax is calculated

• Tax is calculated on the freelancer's service price, before any platform fees.
• It is added on top of that price, not taken out of it.
• The client pays the price plus the tax.
• The tax amount is passed through to the freelancer.

Worked example

A freelancer charges 20% VAT on a $100 service:

The freelancer receives the $100 for the work plus the $20 tax, and remits the $20 to their tax authority.

When no tax is charged

No tax is added if:

• Tax collection is switched off by the admin, or
• The freelancer chose I do not charge tax, or
• The freelancer left the rate at 0, or
• The order qualifies for EU reverse charge (explained below).

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EU VAT and reverse charge

For freelancers using the EU VAT scheme, Xilancer supports reverse charge.

Reverse charge means the client, not the freelancer, accounts for the VAT. It applies when all of these are true:

• The freelancer is VAT-registered in one EU country.
• The client is VAT-registered in a different EU country.
• Both VAT numbers have been verified.

When reverse charge applies, the tax rate is 0% and the invoice is marked "Reverse charge". The client self-accounts for the VAT in their own country.

Xilancer verifies EU VAT numbers against VIES, the European Commission's official VAT number checking service. If a number cannot be verified, reverse charge is not applied and the freelancer's normal rate is used instead.

Keep your details current. A wrong or expired VAT number is the most common reason reverse charge fails to apply.

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US sales tax

For the US Sales Tax scheme, Xilancer applies the rate the freelancer declared, exactly as entered. It does not automatically work out tax by state, county, or city.

That means:

• The freelancer is responsible for declaring the correct rate for their situation.
• If a freelancer operates in several states, they need to decide what single rate to declare, or handle the difference themselves.
• If you need true location-based US sales tax, use the buyer tax rules described below or consult a tax adviser about a dedicated tax service.

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Buyer tax rules (optional)

The second mechanism charges tax based on the client's country, using rules the admin defines.

How it works

• Each rule has a label (for example "VAT" or "GST") and a rate (a percentage).
• When a client from that country checks out, the matching rate is applied.
• A rule with no country acts as the default for any country that does not have its own rule.

Managing rules

From the admin panel:

1. Open the Tax Rules area.
2. Create a rule — choose a country, or leave it empty to make it the default.
3. Enter the label and the rate.
4. Set the rule as active or inactive.
5. Save.

You can edit rules at any time, deactivate them without deleting them, and delete one or several at once.

Turning it on or off

The buyer tax system has its own on/off switch, separate from freelancer tax. It is found in the general settings under Tax System.

Which system applies if both are on?

They are separate. Freelancer tax follows what the freelancer declared on their profile; buyer tax rules follow the client's country. Decide which one you want to rely on before enabling both, and test a checkout to confirm the result is what you expect.

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Where tax appears

At checkout

The tax line is shown before payment, so the client sees the full amount, the rate, and the label before they pay. Nothing is added silently after the fact.

On the invoice

When tax applies, the invoice shows:

• The tax label (for example "VAT (20%)").
• The tax rate.
• The tax amount.
• The seller's identity — the freelancer's legal name, tax address, and VAT number, if they provided them.

The client sees the total they paid, and the freelancer gets an invoice suitable for their own records.

In the tax report

The admin can review collected tax from the Tax Report:

1. Open the tax report in the admin panel.
2. Choose a start and end date.
3. See the total tax collected and a breakdown by tax label.

Only completed orders with tax are included, so the report reflects money actually earned rather than orders still in progress.

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Tax is locked to each order

Tax is recorded on an order at the moment it is placed. If a freelancer later changes their rate, country, or VAT number, past orders and their invoices do not change. This keeps your records and the freelancer's filings consistent.

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Compliance reminders

• Freelancers must remit the tax they collect to their own tax authority. Xilancer does not do this for them.
• Admins should confirm that enabling tax collection is appropriate for their marketplace and jurisdiction before switching it on.
• VAT numbers are checked against VIES where relevant. Ask freelancers to keep them up to date.
• Rates change. Tax law is not static — review your settings and your freelancers' declarations periodically.
• This page is a product guide, not tax advice. For your own obligations, speak to a qualified tax professional in your country.

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Troubleshooting

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Quick setup checklist

• Decide whether you will use freelancer tax, buyer tax rules, or both.
• Turn on Tax Collection.
• Ask freelancers to complete their tax type, scheme, rate, country, and VAT number.
• If using country rules, create your rules and set a sensible default.
• Place a test order and confirm the tax line, total, and invoice.
• Check the tax report shows the test order once it is completed.
• Tell freelancers, in writing, that remitting collected tax is their responsibility.